Author: Andrew Kang

Translation by: Wu Says Blockchain

Andrew Kang, co-founder and partner of Mechanism Capital, has long been involved in investments and trading in the crypto primary/secondary markets and DeFi infrastructure. Recently, he strongly refuted Tom Lee's bullish assertion on ETH on X, calling it "a crude viewpoint mixed with multiple misunderstandings of financial common sense." Interestingly, Andrew Kang had previously stated in April this year that Ethereum would soon drop below $1,000, after which ETH saw a significant upward movement, and this statement has recently been widely mocked. After facing ridicule, he angrily pointed out that Ethereum would become Luna 2.0.

This article does not represent Wu Says' viewpoint but provides a different perspective for readers to consider.

The original text is as follows:

Tom Lee's assertion about ETH is one of the most crude and financially ignorant mixed viewpoints I have seen among well-known analysts recently. Its core basis is as follows:

1. Adoption of Stablecoins and RWA

Tom Lee's argument is that the increasing activities related to stablecoins and tokenized assets will drive on-chain transaction volume, thereby increasing Ethereum network fees and protocol revenue. On the surface, this seems reasonable, but with a little time spent verifying the data, one will find that the facts are not so.

Since 2020, the scale of asset tokenization and stablecoin trading volume has grown by about 100 to 1,000 times. Tom's argument fundamentally misunderstands the value capture mechanism, which may lead one to mistakenly believe that fees and protocol revenue will expand in proportion; however, in fact, the current revenue level is almost the same as it was in 2020.

Reasons include:

• The upgrades to the Ethereum network have made individual transactions more efficient and resource usage lower, thus reducing the fees per transaction;
• Activities related to stablecoins and tokenized assets are migrating to other chains;
• The tokenization of low-turnover assets does not generate significant fees. The scale of tokenization does not correspond linearly to Ethereum's revenue. For example, someone can tokenize a $100 million bond, but if it only trades once every two years, the fees contributed to Ethereum may only be $0.10; conversely, a USDT used in high-frequency scenarios generates higher fees.

Even if the scale of tokenized assets reaches $1 trillion, if there is a lack of active on-chain circulation, the new value added to Ethereum may only be a mere $100,000.

Will blockchain transaction volume and fees grow in the future? Yes. However, most of that incremental growth is likely to be captured by other chains with stronger business development capabilities. In terms of bringing traditional financial transactions on-chain, other participants have already seen the opportunity and are actively promoting it: Solana, Arbitrum, and Tempo have currently secured a large number of early implementations. Even Tether is supporting two new Tether chains—Plasma and Stable—both aimed at migrating USDT transaction volume to their own networks.

2. The Analogy of "Digital Oil"

Oil is a commodity. The real oil price, adjusted for inflation, has fluctuated within the same price range for over a century, with occasional spikes, but ultimately returning to lower levels. I agree with Tom's view: ETH can be seen as a "commodity," but this does not constitute a bullish logic. I do not quite understand the positive implication Tom is trying to express here.

3. Institutions Will Buy and Stake ETH to Enhance the Security of the Network for Asset Tokenization and Use It as Operating Capital

Have large banks or other financial institutions included ETH on their balance sheets? No. We also have not seen any institution announce related plans. Would banks stockpile large amounts of oil in advance due to their continuous energy needs? No, because that cost is not significant, and they usually pay as needed. Therefore, I do not think banks would buy stocks of the asset custody institutions they use.

4. ETH Will Be Equivalent to the Total Value of All Financial Infrastructure Companies

To be honest, this again reflects a fundamental misunderstanding of the "value capture" mechanism, almost to the point of being purely speculative.

5. Technical Analysis

I am actually a proponent of technical analysis and believe it is very valuable when used objectively. Unfortunately, Tom seems to be drawing lines in technical analysis arbitrarily to validate his existing position.

Objectively speaking, the clearest conclusion from this chart is that Ethereum is still in a multi-year range consolidation. Similar to crude oil prices, crude oil has also fluctuated within a wide range for the past thirty years. Moreover, recently Ethereum touched the upper end of the range but failed to effectively break through the resistance. Overall, the technical outlook for Ethereum is bearish. I would not rule out the possibility of it maintaining a longer duration within the $1,000–$4,800 range. Just because an asset has experienced parabolic growth does not mean that such a trend will continue indefinitely.

From a long-term perspective, the trend of ETH/BTC has also been misread. Indeed, it is in a multi-year range, but in recent years it has been primarily dominated by a downward trend, with the recent rebound merely occurring near a long-term support level. The reason for the weakness is that the narrative around Ethereum has become saturated, and its fundamentals are not sufficient to support continued valuation expansion. These fundamentals have not changed to this day.

The current valuation of Ethereum largely stems from investors' lack of financial knowledge. Objectively speaking, such factors can also accumulate a considerable market value—just look at XRP as an example. However, the valuation derived from "lack of financial knowledge" does not rise indefinitely. Broader macro liquidity allows ETH's market value to remain stable, but without significant organizational-level changes, its long-term relative performance is likely to remain poor.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。